What you need to know about flood insurance

Dealing with water damage in your home can be a huge challenge and, in some cases, can lead to costly repairs. If you want to protect your home and property from flooding in your area, you need more than a homeowner’s policy.

Standard homeowner’s insurance does not cover flood damage. To protect you in such situations, you need separate flood insurance.

Here’s what you need to know about flood insurance.

What does flood insurance cover?

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A standard homeowner’s policy does not cover flood insurance.

According to National Flood Insurance Program (NFIP)A federal flood insurance program established under the National Flood Insurance Act of 1968, flood insurance can cover a number of things in your home based on two categories, the building or structure of your home and its contents or personal property in your house.

The architecture or design of your home may include:

  • Electrical and plumbing systems
  • Furnaces and water heaters
  • Refrigerators, stoves, dishwashers
  • Carpeting
  • Cabinets and bookshelves
  • Blind windows
  • Foundation walls and stairs
  • Closed garages
  • Fuel tanks and electrical equipment

Your personal or household contents include:

  • Clothes, furniture, electronics
  • Curtains
  • Washers and dryers
  • Air conditioners and windows
  • Microwave ovens
  • Valuable items such as wool and original paintings

Where can you get flood insurance?

You can buy flood insurance at the insurance market or at NFIP.

“Flood insurance can be purchased through local insurers by homeowners, business owners, and renters who want protection for their homes, buildings, and property. Homeowners can purchase separate flood insurance to protect their home,” said Loretta Worters, vice president of media for the Insurance Information Institute.

How soon does flood insurance take effect?

With NFIP, flood insurance comes with a 30-day waiting period, but you won’t have to wait that long if you get flood insurance from other sources.

With market flood insurance, your waiting time will be 10 to 14 days.

How much does flood insurance cost?

Flood insurance from the NFIP costs about $700 a year. But private insurance can cost more because it comes with higher limits and higher coverage and can cost more than $2,000.

According to FloodSmart.gov, factors that affect the price you will pay for flood insurance include:

  • Flood risk in your area
  • Types of coverage such as coverage for your home and the protection of your belongings
  • The amount of support you buy
  • The deductible
  • Your home environment
  • The age and design of your home

What are the limits of flood insurance?

Coverage limits vary depending on where you purchase.

When you purchase flood insurance through the National Flood Insurance Program, there are limits of $250,000 for the home and $100,000 for contents. And for businesses, it’s $500,000 for design and $500,000 for content.

But you can buy insurance with higher limits in the private market.

“The private market has made it available to people over the last 10 years. It’s more comprehensive than NFIP policies that have higher limits,” says Worters. “What sets private flood insurance apart is that it doesn’t receive subsidies from the federal government.”

When is flood insurance necessary?

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To get flood coverage, you must purchase a separate policy.

If you own a home or business in an area prone to flooding, you may need to purchase flood insurance. You can tell if your home is in a flood zone by using FEMA Map Services Center.

“Property owners in flood-prone areas should have flood insurance if they have a federal mortgage,” says Worters. “Even though flood insurance isn’t required by the state if you live outside of a high-risk area, your lender may still want you to have it.”

How common are floods?

Flooding is the most common and costliest type of natural disaster. One inch of water in a home can cost more than $25,000. In high-risk areas, there is a one-in-four chance of flooding over the course of a 30-year loan, according to a spokeswoman for the Federal Emergency Management Agency.

Areas that are less vulnerable to flooding also. One in three flood insurance premiums come from flood-prone areas, according to FloodSmart.gov.

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Prices were correct at the time this article was published but may change over time.